Fascinating- (some) Financial Intuitions offering zero percent interest, no transfer fee credit cards

[GON]

Earlier today I received a marketing email from my credit union offering a Platinum card, no annual fee.

What really caught my eye was the offer for the card included a zero interest for 12 months, and zero transaction fees for balance transfers. I get an ample amount of pre-approved credit card offers with teaser rates. But all the rates come with a +/- five percent transfer fee (which I think it trickery).

I have no desire for another credit card, but was blown away that a financial institution is essentially offering money at zero percent for one year. More eye catching at a time that interest rates are expected to be static, or increase. Of note, I have a CD with this financial institution paying 4.599 percent.

If financial institutions are offering loans at zero percent for one year, maybe the USD is healthier than I thought. And the federal debt and deficit is not as bad as I accessed..... Beats me--- just glad I am not a banker.

 

[rijndael]

If I get a credit card with 0% and no transaction fee, I'll pay off my car note with it.

 

[alarmguy]

A long time ago I used to get zero transaction fees and could use the checks anyplace I wanted. I could then select either zero percent at a super low rate for one year or low rate for the life of the loan. Meaning low as in current mortgage rates and lower.
Those types of offers I think are gone forever but maybe coming back? Not sure if they are allowed.

The offer the OP has can work well for him if one is responsible and pays off the balance by the end of 12 months or else you will get slammed with a years worth of interest collected not only on the balance but also on the interest that wasnt paid during the year. Also he must only use the card for balance transfers as if he even uses the card for a gallon of milk one time during that year he will pay interest on the ENTIRE loan amount. Meaning full interest will be paid on the balance not just the gallon of milk.

The reason the banks make these offers is because most Americans are not responsible enough to pay off the loan at the end of the term and that is the banks pay back in this debt ridden country. Also note how many people do not know what I typed above about "Milk"
This type of offer will only go out to people like @GON whom maintains a healthy credit rating. As the bank takes on risk and wants to know the money will be paid back on an unsecured loan.

 

[alarmguy]

If I get a credit card with 0% and no transaction fee, I'll pay off my car note with it.

They might get you on that if you dont read the fine print.

 

[Astro14]

Of course they are - this isn’t new.

This is arbitrage - some consumers will move a balance, and pay it off before interest accrues, getting, essentially, free money.

But the other 99% won’t, and the bank makes out getting full interest back to the date the account was opened.

 

[mk378]

But the other 99% won’t, and the bank makes out getting full interest back to the date the account was opened.

@GON check the fine print do they do that? Interest being only deferred and not forgiven is common on store accounts like furniture but I haven't seen it on a bank card. In any case they're really counting on you not paying it off fully before time runs out.

Also if you charge anything else on the card you will pay interest on that even making large monthly payments. Your payments go first to pay down the zero APR balance before any purchases can be paid off.

 

[SC Maintenance]

Does the card give back any cash back?

The free money is on the balance.

If you add to it you pay full boat. Any payments likely go towards the balance. So in reality they float your old money but charge you 20% on anything addtional you buy. And given you didn't pay off your last card, you likely won't pay this one off.

If you want to do it and don't charge anything further - you can get free interest for a year - if thats worth the juggling act.

 

[BaronHK]

If I get a credit card with 0% and no transaction fee, I'll pay off my car note with it.

I'd probably just write the check to myself and invest it in an 11 month CD right away then pay it back and keep the interest.

 

[BaronHK]

@GON check the fine print do they do that? Interest being only deferred and not forgiven is common on store accounts like furniture but I haven't seen it on a bank card. In any case they're really counting on you not paying it off fully before time runs out.

Also if you charge anything else on the card you will pay interest on that even making large monthly payments. Your payments go first to pay down the zero APR balance before any purchases can be paid off.

It seems that would probably be illegal under the Credit CARD Act, which says that the bank must put your payments towards the portion of the balance with the highest interest rate first.

I doubt that banks will just go around stacking up violations just because the CFPB says they're not going to enforce the law for the next few years.

 

[eljefino]

I'd probably just write the check to myself and invest it in an 11 month CD right away then pay it back and keep the interest.

I remember a decade or two back when the US Mint was selling sacks of silver dollars, shipped to your door, for face value. People were buying them for the credit card points then redepositing them as legal tender.

 

[BaronHK]

I remember a decade or two back when the US Mint was selling sacks of silver dollars, shipped to your door, for face value. People were buying them for the credit card points then redepositing them as legal tender.

Yes, it's not surprising that someone in government finance thought selling heavy coins that had to be shipped for face value, and incurring card fees, would work out.

It would have been cheaper to hand all of the people who did that 20 times more than they made in credit card points and not even bother with the coins.

I think they should just get rid of bills and go to coins honestly. They spend so much money just reissuing bills, especially in the lower denominations.